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elliot

403(b) Vendor Reps

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Guest TR1982

I think you should let the our system work and let each person decide for themselves. What's it to you if someone wants to pay for that? I send my kids to private schools at the cost of $15,000 per year. I'm sure you think I am stupid, but trust me, I know what I am paying for and gladly do it. That's what is great about our system, you and I each can decide for ourselves without some people telling us we are braindead because we don't do things their way. I can't stand that, it's so condescending.

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I think you should let the our system work and let each person decide for themselves. What's it to you if someone wants to pay for that? I send my kids to private schools at the cost of $15,000 per year. I'm sure you think I am stupid, but trust me, I know what I am paying for and gladly do it. That's what is great about our system, you and I each can decide for ourselves without some people telling us we are braindead because we don't do things their way. I can't stand that, it's so condescending.

Perhaps you didn't notice that my last post ended in the form of a question. I think it was a fair question to ask.

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Guest TR1982

I'm sorry AP, I was really responding to Sierra's response. His posts really wear me out. For some reason he just has no ability to think beyond his own point of view. Is it so hard to imagine that other people might just chose to do things differently than yourself? I have no problem with people who want to manage their own money. What I don't understand is calling people "braindead" because they might want to pay someone to do something for them (for example, teach their kids).

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Guest Sierra

I'm sorry AP, I was really responding to Sierra's response. His posts really wear me out. For some reason he just has no ability to think beyond his own point of view. Is it so hard to imagine that other people might just chose to do things differently than yourself? I have no problem with people who want to manage their own money. What I don't understand is calling people "braindead" because they might want to pay someone to do something for them (for example, teach their kids).

 

Anyone who has no-loads on their 403(b) investment menu and decides to buy a loaded fund is indeed braindead. TR, You make a living in the commissioned market. When was the last time you recommended to a family member to buy a loaded fund? You would never let a commissioned salesperson sell that crap to someone who is important to you yet you would sell it to a stranger. Did you ever think that the strangers you sell to have a family that consider them important?

 

 

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TR ,

 

Sierra is 100% correct! T

The majority of people who are in these horse#### 403b funds offered by AIG, ING, etc etc that charge high fees are sold these products and are indeed braindead for doing so. I'll bet you that if you surveyed most of these people they will tell you they are clueless about the 403b and were placed into the funds by a salesperson that approached them.

 

These DOES NOT mean they chose to have somebody "manage" their money for them. These folks ARE financially ignorant because if they were given the facts they would choose the no-load alternatives!

 

You and others like you make a living fleecing these people out of their hard earned money. You will never admit it because this is your livelihood. I know that I can make an assumption that you would NEVER put your family members in LOADED funds so why do you and others like you continue to victimize innocent teachers who due to their ignorance sign on to your annuities that cost them thousands of dollars per year in unnecesary fees. I'll bet if you informed your victims of their 403b investment choices and were honest, NOBODY would invest with you.,

 

To say some people would rather pay to have someone manage their money is a bunch of bull****! Because you are assuming they know what their options are. They do not. In fact, when my wife started teaching she was approached by a rep. from Zurich Kemper. We set up an appointment to meet with him at our local library. At the meeting, he presented to us an annuity and being none the wiser at that time we signed up. I was cognizant of that fact that the fees were extremely high which led me to start asking more questions. We assumed that since he approached her that he (Zurich Kemper) was the ONLY option and we did not realize the school had other vendors to choose from.

 

We were pleasantly surprised to see Fidelity and Vanguard as vendors among a list of twenty and the rest were all insurance companies. We signed up with Vanguard and transferred her Zurich Kemper money to Vanguard as well. We were lucky to have only been victimized by three payroll deductions to the annuity, so are losses were minimal. 11 years later, we are doing much better than her counterparts in the annuities.

 

There are countless other with similar experiences, they did not choose the annuity they were SOLD the y annuity due to their financial igorance. They are the prey and guys and gals like you TR1982 are the predators. Sierra's posts are backed by facts. THe facts are what they are. You sell annuities to unsuspecting people because you are take advantage of their financial ignorance! Why don't you tell your victims about this website and then let's see how many remain with you. Probably none.

 

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Guest TR1982

Wow, I'm glad I got you guys to talk and inform me. I will immediately pull my kids out of their high priced private school since I am clearly being fleeced! Where have I been all these years? I have been so ignorant. I'll make sure that I never go to any firm that pays any employee an incentive or commission. What a stupid way to do business. Why would anyone do business like that? You got me! Thanks guys.:)

 

And, BTW, I have often put my OWN and my FAMILY members money in loaded funds. There are a number of good ones out there. YOU just don't know about them. But don't worry, I'll never tell you.

 

Sincerely,

THE PREDATOR

 

PS Please explain why you insist on cursing at me. I have not cursed at you or anyone else and I think it's pretty rude.

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Hi Ft6,

All of your posts are excellent. Thanks for joining this great site that seeks to reform this horrible system, the 403b world intimately connected with the rip-off sales people who take advantage of educators’ lack of knowledge from their districts and unions, that you eloquently described. Your story is our story.

Mine was similar. I asked my sales person to put me into an account with no surrender fees, she put me into another company but with surrender fees. I will never forget that and that was 20 years ago.

Steve

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FT,

"A stupid way to do business."

The business is called "attraction" rather than "promotion." Vanguard does it right with no commissions or high fees and they have a trillion dollars in assets. That GREAT BUSINESS!! Apparently, giving a great product and the investors will come is good business, WHEN YOU LOOK OUT FOR THEIR BEST INTERESTS! Now that is a novel idea. Funny how things work like that. But I guess you will never understand that.

 

What I don't understand is why you keep insisting your point of view on a website that CLEARLY wants to reform the 403b system and the majority of posters here see through the sales tactics. Perhaps under that coarse exterior, you are a real sweety and want to be part of our team. :-))

 

BTW, your posts have gotten better especially the ones responding to Cicco. Congratuations, for a minute there I thought you were starting to get reeducated, but you had a relapse on this thread.

We have gotten ripped off and there is no getting around that.

Steve

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Guest TR1982

"To say some people would rather pay to have someone manage their money is a bunch of bull****! Because you are assuming they know what their options are. They do not. In fact, when my wife started teaching she was approached by a rep. from Zurich Kemper. We set up an appointment to meet with him at our local library. At the meeting, he presented to us an annuity and being none the wiser at that time we signed up. I was cognizant of that fact that the fees were extremely high which led me to start asking more questions. We assumed that since he approached her that he (Zurich Kemper) was the ONLY option and we did not realize the school had other vendors to choose from."

 

Please explain to me how you were fleeced. No one forced you to meet with this person. No one lied about the products you bought. No one forced you to sign a contract. No one failed to disclose anything. The person who is responsible here is YOU, YOU, YOU. Why do people insist on blaming other people for their mistakes? Why don't you start taking responsibility for your own actions and stop blaming someone else who is doing their job?

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Guest Sierra

"To say some people would rather pay to have someone manage their money is a bunch of bull****! Because you are assuming they know what their options are. They do not. In fact, when my wife started teaching she was approached by a rep. from Zurich Kemper. We set up an appointment to meet with him at our local library. At the meeting, he presented to us an annuity and being none the wiser at that time we signed up. I was cognizant of that fact that the fees were extremely high which led me to start asking more questions. We assumed that since he approached her that he (Zurich Kemper) was the ONLY option and we did not realize the school had other vendors to choose from."

 

Please explain to me how you were fleeced. No one forced you to meet with this person. No one lied about the products you bought. No one forced you to sign a contract. No one failed to disclose anything. The person who is responsible here is YOU, YOU, YOU. Why do people insist on blaming other people for their mistakes? Why don't you start taking responsibility for your own actions and stop blaming someone else who is doing their job?

 

 

Let's assume for a moment that robbing houses is a legal occupation. You TR, would never voluntarily enter that occupation because robbing houses violates your moral core. Yet you defend selling someone a loaded 403(b) investment every two weeks and blame the sap for for signing the contract without doing his hw. But you would never rob someone's house and defend your action by telling the homeowner "you forgot to lock the door".

 

Just like a real house robber you rationalize and blame the victim. The only thing that would force you to find a moral line of work is making the selling of loaded mutual funds a crime just like robbing houses.

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Guest Sierra

TR said; "Please explain to me how you were fleeced. No one forced you to meet with this person. No one lied about the products you bought. No one forced you to sign a contract. No one failed to disclose anything. The person who is responsible here is YOU, YOU, YOU. Why do people insist on blaming other people for their mistakes? Why don't you start taking responsibility for your own actions and stop blaming someone else who is doing their job?"

 

Your defense wouldn't hold water with Eliot Spitzer. Remember, he's the guy that ruled against the ING/NY State Teachers Union alliance.

 

 

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I feel a bit obligated to jump in here, since I started the topic. First I think the personal attacks are out of bounds. Obviously people have had bad experiences with 403(b) reps, and it sucks. But generalizing is also wrong. Second, I wish posters would distinguish between mutual funds (load or no-load) and annuities. There are good load funds out there, and there are lousy no-load funds. However, annuities, those are complex beasts for which the quality depends on the contract you sign.

 

There are insurance companies that are vendors for 403(b)s. They put people in annuities. Those have high expenses. Also, they are tax-deferred investment vehicles that are already in a tax-deferred account. This is why annuities in a 403(b) are wrong. It is not because annuities are wrong. It's not even because they are often pushed onto teachers (who may or may not know better). To take it a step further, the fact that teachers often don't see their reps again is not even the worst thing. Quite simply, even if there are lower fees, and only surrender charges, annuities are an improper investment for the 403(b).

 

On the other hand, there are firms that are 403(b) vendors that are not insurance companies. Some only operate over the phone (Fidelity and Vanguard, apparently according to posters). Others, including the one I am interested in (Lincoln Investment) have reps on site. These firms place clients in mutual funds. If there is a rep on site, there is an expense associated with it. You should receive value for the expense. The person should sit with you to discuss risk aversion, goals, desired retirement age, etc. The rep should develop a solid relationship such that it expands to other financial goals (kids college, vacation home, paying off debt, etc). Additional compensation for these dealings should be discussed up front, but for this hands-on and direct contact, the rep should receive compensation. The over-the-phone companies, however, will not charge you transaction fees. The trade-off lies in not having that one person to whom you can speak, and get advice. There should be value. Also, it should save you time from agonizing over trying to understand the literature, and instead having someone help explain everything.

 

Ultimately, the client is responsible for all investments. Even with Fidelity, they will not tell you if you have a good fund or if you will outperform. They will also send you to a website to determine if you are properly diversified. But you make the choices. Whether it's through Fidelity, an insurance rep, or non-insurance vendor, the client chooses. Any time you make a purchase, you want to know what you get for your money, and how much it costs you. If you buy a home, you don't just look at the purchase price. There's closing costs, financing, property taxes, maintanence, upgrading (depending on the home's age), and other ongoing costs. Any smart, intelligent person looks at these things to help determine the affordability. The same is true for investments. It's not so much what the rep gets paid, because it's not the full amount it costs a client. It's what does it cost the client, is the investment appropriate for the client, and is the client getting value for the cost.

 

Please, keep this constructive. Don't assault how someone conducts their business because you have had a bad experience with someone else in their field. Let's face it, there are plenty of people on here who have spelling errors, mix up words, and horrible grammar, and are teachers. I'm not going to ask where you teach and say you are ruining kids' lives because you yourself can't type properly. That's making it personal. It's unnecessary. It sucks if you have an awful story to tell about 403(b) vendors. This site exists to help affect change. It is not to run people out of the schools, but to change how they conduct business. In order to do that, everyone has to post objectively, try to view different perspectives outside of their experiences, and then draw on personal experiences to help correct consensus problems.

 

At least that's why I'm posting. I'm entering this field to not cause problems, but to actually help people. I want to know the bad experiences, but not if someone is ranting at me and saying everyone in the field I'm entering is useless. It's not appreciated, and certainly not helpful.

 

Thanks,

Elliot

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Please explain to me how you were fleeced. No one forced you to meet with this person. No one lied about the products you bought. No one forced you to sign a contract. No one failed to disclose anything. The person who is responsible here is YOU, YOU, YOU. Why do people insist on blaming other people for their mistakes? Why don't you start taking responsibility for your own actions and stop blaming someone else who is doing their job?

 

TR1982 we took full responsibility for meeting with this agent and signing a contract that placed us into an annuity with mutual fund sub accounts but this does mean we had to like being taken advantage of. The agent who sold us this 403b tax sheltered annuity never spoke to us about our personal situation in regards to risk tolerance or any other investments that we may have held outside the 403B that may have had an influence on which mutual funds he was going to advise us to invest in. He drew up a contract, selected several funds, we shook hands and that was it. We did not receive any value for all those additional expenses we would have paid. The meeting took place with one purpose and that was to get our business and no other financial aspects of our lives were discussed. Looking back it was kind of like a "hit and run".

 

We made the mistake of putting our trust in him. When he made mention that he was a retired school administrator, we placed our trust in him but never envisioned him as the salesman that he in fact turned out to be. He made us feel like he had our best interests in mind. We had no idea what we had gotten ourselves into. He was charming, well spoken, polite and like Allstate, made us feel like we were in good hands. Is this our fault? Yes to some degree because we had not done our due diligence. There are countless scores of other people out there with a similar rendition of how they got started in their 403B's. This is not a coincidence.

 

The majority of school teachers have a fault which makes them prime candidates for 403b Annuity Agents. They are financially ignorant. I do not mean that in a mean spirited way but in an factual way and I extend this lack of personal finance to others beyond teachers. The school system has failed in a miserable way to educate our students on money matters. Whether you send your kids to private schools or public schools one common denominator remains, the lack of education in the area of personal financial management. We have students graduating high school in which some go to college and others do not and the majority of them do not know the difference between a 401k and an IRA, between a Loaded Fund and a No-load Fund, or how to shop for a mortgage just to name a few.

 

Teachers happen to be a product of this system and they come from private and public schools. I believe the majority are hard working individuals that have dedicated their lives to teaching our kids, but unfortunately when it comes to investing the majority are in the dark. When some of them do sign up and start investing in their 403b program the majority do so via an annuity with mutual fund sub accounts. This does not happen because it was by choice, it happens because an agent put a flyer in their school mail box, sent a letter to their home or approached them at school. Do you honestly believe that these teachers are fully aware of the costs and of the no-load low cost alternatives. Trust me they are not.

 

The school districts compound the problem by offereing little or no information to their employees on their 403b choices and the impact of fees. In addition, my wife's pay check stub has "TSA" instead of "403b" which misleads teachers into thinking they have to invest in a Tax Sheltered Annuity.

 

I have spoken to several of my wifes colleagues and they were astonished to learn of the alternatives offered by the school district. Not one of them said anything positive to indicate they would still continue to invest in their annuities. Four out of five of them rolled their money into Vanguard and one of them did not want to pay the surrender charge, so she froze that account and started a new one with Vanguard. All of them were very disappointed and genuinely felt taken advantage of. All five of those teachers said they followed the agents advice and felt they were taking the right step in saving money towards their retirement.

 

I will continue to beat the drum for investing outside of annuities and directlly with No-Load providers like Fidelity and Vanguard. There are new visitors that come to this site seeking information and they need to know the truth about their options which 403b agents and school districts do a poor job of disclosing. Annuities and loaded funds, are not a wise way to invest. The rules have not changed. Diversify, Index and Minimize expenses, you will be wealthier and hopefully have more wealth to pass on to your kids or heirs.

 

TR1982, As a salesperson you earn a living by selling investment products that earn you a commission. Do you not see the conflict of interest? You claim that the commissions you earn are justified by the services you perform. This can only be true on ONE condition. If an investor was FULLY aware of his or her options. But the sad truth is that they are financially incompetent making them prime candidates for lousy investments. Your clients would be better served if you advised them on a fee only basis and put their contributions in a no-load index fund(s).

 

Teachers and others investing their retirement money in their 403B's deserve to be in funds with minimal expenses. Annuities and Load Funds do the opposite. They saddle you with HIGH costs which put a drag on your net return. Reliance on agents like TR1982, will have you paying more in expenses and getting less in return. Remember when you pay 5% upfront in the form of a load, you are already down 5% ! You need to earn 5% just to break even. Annuities that have mutual funds as sub accounts also face a similiar dillema. On average the total yearly expense of owning these annuities most teachers are sold is 2.5%,(250 basis points) plus they come with surrender fees. If my account total is 50,000.00, at the end of the year my expenses with the annuity are $1,250. With Vanguard, my expenses would be around .25 basis points by using their index funds and this translates to a fee of $125.00.

 

These are the numbers an agent won't show you because you might wisen up send your hard earned money directly to Vanguard or another No-Load Family.

 

 

 

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Guest Sierra

ft6: Just an arithmetic correction to an otherwise flawless position. If you pay 5 percent to ACQUIRE a fund you need to earn 5.26 percent just to break even.

 

Elliot: May I suggest you log onto the NYC Deferred Compensation Plan and see how an employer treats the employee absent a personal sales rep.

 

Joel

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